EUR/USD forecast as Goldman Sachs predicts a return to dollar slide - Invezz
Goldman Sachs is forecasting a significant decline in the U.S. dollar, particularly against the euro, predicting a target of 1.2500 for EUR/USD by December 2026. This aligns with other firms' positive outlooks on the euro, reinforcing the prospect of dollar depreciation amid global economic shifts and relatively stronger performance from the European economy.
What the desk is arguing
Goldman Sachs' recent forecast indicates a notable downward trend for the U.S. dollar, which is expected to bolster the euro significantly over the coming months. This outlook suggests a fresh wave of confidence in the eurozone's economic resilience and hints at potential monetary policy shifts that may favor euro strength.
Supporting this thesis, the consensus target for EUR/USD shows a steady upward trend, with most major banks adjusting their targets upwards for 2026. Goldman’s specific call of 1.2500 by December 2026 is consistent with rising sentiment across the analyst community that favors the euro as the dollar's strength wanes, especially in the face of anticipated interest rate adjustments by the Federal Reserve.
Where it sits in our coverage
Our current consensus target for EUR/USD stands at 1.2200 in December 2026, which indicates a broader optimism within the market, albeit slightly more conservative than Goldman’s perspective. The range of targets from various banks reflects their confidence in the euro’s potential upward momentum against the dollar, with most firms indicating levels within the 1.1700 to 1.2500 range.
- Goldman: Dec26 1.2500
- Deutsche Bank: Dec26 1.2500
- MUFG: Dec26 1.2400
How other firms see it
Other banks largely support the view of euro strength against the dollar, with several aligned in their outlook. Morgan Stanley and ING, for example, project EUR/USD targets that resonate well with Goldman’s forecasts, albeit generally taking a more cautious approach with lower forecasts toward the end of 2026.
- Morgan Stanley: Dec26 1.1600
- ING: Dec26 1.2200
- Barclays: Dec26 1.2100
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Goldman Sachs anticipates a move towards 1.2500 for EUR/USD by December 2026.
- 02Consensus targets indicate a rising outlook for the euro against the dollar.
- 03Several firms project euro strength, albeit with varied degrees of caution.
Market implications
The forecast from Goldman Sachs, if materialized, could signify shifts in investor sentiment favoring euro assets, likely leading to a reallocation in forex portfolios. Market participants will need to monitor U.S. economic indicators and Fed policy closely as any dovish signals could accelerate this trend.
Risks to this view
Key risks include unexpected shifts in U.S. monetary policy or economic data releases that could surprise the market. Additionally, geopolitical tensions or economic weaknesses in the eurozone could undermine the euro's projected strength.
EUR/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
Scotiabank | Bearish | 1.1200 |
Bank of America | Bearish | 1.1200 |
ANZ | Bearish | 1.1400 |
Sources & References
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